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Enron Probe Shifts to Lay

Feb 2, 2004 | Wall Street Journal

Federal officials are exploring whether there are grounds to bring criminal charges against former Enron Corp. chairman Kenneth Lay regarding what he knew about the energy company's festering, yet still largely secret, financial problems in the months before its collapse, Monday's Wall Street Journal reported.

The critical period under examination began in August 2001, when Mr. Lay's longtime lieutenant, Jeffrey Skilling, unexpectedly quit as Enron's chief executive after only six months in the top job. Mr. Lay resumed the chief executive post that he had held for some 15 years and remained there through the company's collapse in the fall of 2001 and eventual bankruptcy-court filing that December. Federal officials are comparing what Mr. Lay knew in those final months to his upbeat public remarks about the company's condition, said people familiar with the probe.

Mr. Lay has denied any wrongdoing during his tenure at Enron. He and his representatives have said that his public remarks about the company in the last half of 2001 were made in good faith and that he was unaware of the scope of some of the problems facing Enron. In response to an interview request, a spokeswoman for Mr. Lay said her client had no further comment.

Federal investigators are interested in the months before the bankruptcy filing, in part because the departure of Mr. Skilling meant that Mr. Lay "can't say that he wasn't in charge" during that critical period, said one person familiar with the matter.

Mr. Skilling is also under federal criminal investigation and has denied any wrongdoing. However, prosecutors believe that they might be in a position to file criminal charges against him within the next several weeks, said one person familiar with the probe. The government isn't that close to making a decision, one way or the other, regarding Mr. Lay, said people familiar with the matter.

Mr. Skilling was widely credited with transforming Enron from a staid natural-gas pipeline company into a red-hot global energy trader.

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